Forget trade protectionism, PNGMC

Editorial, Normal

THE National has published several articles on trade protectionism on domestic industries and its application in the PNG economy. 
This discussion has largely been generated by the PNG Manufacturers Council (PNGMC) which is one of the most influential private sector groups in the country although one has to ask the question if its interests are consistent with broader PNG national economic interests.  
Sure, many of our wantoks are employed by their members and they do generate money but how much of it is reinvested to gain market share in the country and invest in our people? 
Not much, unfortunately, and it only takes a quick trip around the industrial parts of our cities to see archaic machines and dilapidated sheds that the PNGMC represent. 
In real terms, we are looking at a very small percentage of Papua New Guineans actively participating in this sector. 
So the question of whose interests the PNGMC is serving must be addressed on the outset.
I am surprised that it is now advocating for protection measures when it was this very organisation and its former flamboyant chairman Wayne Golding who negotiated for higher thresholds on tariff liberalisation in every PNG trade agreement. 
From the World Trade Organisation’s  (WTO) 77% tariff liberalisation to all WTO members, Melanesian Spearhead Group (MSG) trade agreement (98% tariff reduction only applicable to MSG members) and the recent interim  economic partnership agreement (IEPA) with the EU (80% duty free of EU products).
From recollection, PNGMC pushed trade negotiators to agree on these rates because PNG manufactures need cheap imports to cumulate finish products. It is logical, getting in products not subject to duties, in theory, will make the final product competitive.
I am not trying to assert blame on the PNGMC but it is obvious that the commitments in the WTO, MSG or IEPA on tariff liberalisation were in full consultation of the PNGMC. 
That aside, I’m not entirely convinced that tariff liberalisation is to be blamed for the underperformance of our products. 
Inherent problems exist that drives PNG consumers away from PNG products. 
Manufacturing costs for utilities, transportation and labour drive costs of PNG products high. 
The consumer would obviously buy products that are cheaper and as one of our leading consumer experts once commented: Papua New Guineans are price conscious and not quality conscious. So at the end of the day, it is up to the consumer.
Yes, the government can assist through established trade rules under the WTO agreements such as dumping, safeguard and countervailing duties and import restrictions, but these interventions are worthless if the private sector is unable to generate greater market share with limited or no government support.  
It is a reality that doing business in PNG is tough and the cost of utilities, transportation and labour remain exceptionally high. 
If the government were to assist the PNGMC, it must be in these areas and not on protectionism measures but ways in reducing costs in utilities, opening up the shipping services, improving labour standards, etc.
If the PNGMC is serious about being competitive and promoting the long term interest of PNG, it should do the following:
* Create linkages and ventures with our people in the rural areas so that collectively they can utilise the resources for value adding and transforming raw materials into finished products;
* Create a dialogue with government agencies such as commerce and industry, planning and trade so as to align targeted polices and public investment programmes to promote domestic industry growth;
* Dialogue with banks and financial institutions on devising products that assist in giving credit financing to domestic industry ventures;
* Dialogue with government on improving bottlenecks in price of utilities, transportation services and labour standards;
* Incentives to train PNG nationals; and
* Dialogue with government on developing legislation in dumping, countervailing and safeguards. 
These tasks are no doubt challenging but let me say if the PNGMC does embrace them, then my wantoks, the PNG Made mark has truly live up to its reputation. 
For the contents of the product and its workers are our wantoks from the Highlands to the islands, and from coast to coast, they have toiled the land, caught the fish and made it into a truly Papua New Guinean product.


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